I'm an author and advisor who focuses on helping those doing good in the world. I call myself a "champion of social good." As a Forbes Contributor I cover social entrepreneurship and impact investing. My books on personal finance and crowdfunding draw on his entrepreneurial finance experience as an investment banker, CFO, treasurer, and mortgage broker in order to help people use financial resources to do good. Previously I worked on the U.S. Senate Banking committee staff and earned an MBA at Cornell.

10/15/2012 @ 2:05PM33,074 views

Why Crowdfunding Will Explode In 2013

The world of entrepreneurial finance is changing rapidly; we are at a tipping point that will make what seems like a vibrant part of our global economy today seem small in one year’s hindsight.

Whether you are a service provider, social entrepreneur, angel investor, venture capitalist, or one of the millions of people ready to become a small-scale start up financier, it is time to pay attention.

Estimates for annual crowdfunding transactions go as high as $500 billion annually compared to 2011’s $1.5 billion (anticipated to be $3 billion in 2012). If crowdfunding even begins to approach that scale, it will completely change the landscape for start-up financing.

Sherwood Neiss, courtesy of Leverage PR

Jason Best and Sherwood Neiss helped lead the successful effort to get crowdfunding approved in the JOBS Act passed earlier this year. Niess explained that the folks at the SEC described themselves as “a reactive and not a proactive organization.” The SEC explained that they needed direction from Congress before they could do anything about crowdfunding equity. “We delivered an act of Congress. They weren’t expecting that.”

The Act gives rulemaking authority to the SEC and FINRA; Best and Neiss are now meeting regularly with regulators to help define the shape of these rules—which could determine the success or failure of the Act.

According to Neiss, regulators approach novelty with a focus on preventing fraud—it’s what they deal with every day. They aren’t in the business of creating jobs—even though that is the legislation’s intent.

Neiss and Best recently wrote a piece for Venturebeat that explains the real issues that need to be resolved in the regulation. It is well worth the read.

WeSparkt founder Jonathan Blanchard explained WeSparkt’s focus on social entrepreneurship. Their new crowdfunding platform is designed specifically to take advantage of the JOBS Act to allow social entrepreneurs focusing on a double bottom line (profit and social good) to raise equity.

Blanchard sites a Monitor study suggesting that crowdfunding will grow to $500 billion annually. His site will target impact investors hoping to create social change.

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Leadership is needed and Jason Best and Woodie Neiss are the leadership we need to accolade. The crisis has been devastating for all of our friends and families. The leadership in Crowd Funding raise a new light and a new future. Our commitment at TheSohoLoft will continue to support them and all visionaries. We predict crowd funding will be a $1 trillion dollar business within 10 years so we encourage you to read and learn more….

Let’s hope so. My fingers are crossed. Equity crowdfunding has so much potential and it’s about time retail investors got a piece of the pie. This post discusses the benefits of equity crowdfunding: http://blog.sprinklebit.com/the-power-of-crowds-how-equity-crowdfunding-will-revolutionize-retail-investing/

There was an important development in crowdfunding just last Friday. “Selfstarter” crowdfunding software was released by Lockitron under an open source license. http://selfstarter.us/ Selfstarter allows inventors to set up their own crowdfunding campaigns. Lockitron used it to raise $1.8 million in 10 days for initial production of their new iphone controlled door lock. It uses Amazon payments to collect funds. Backers are not charged until the product is ready to ship.

How Selfstarter will develop under its open source license is anyone’s guess. The vision, though, is a secure reliable method of raising funds that any inventor can use.

We recently interviewed the Founder & CEO of TerraCycle about crowdfunding for equity. The result is a great overview on the potential of crowdfunding for small businesses, entrepreneurs and unaccredited investors. Not only is this an opportunity for small businesses/startups to secure funding, but will also allow the average American the right to invest in ideas they want to support- whether a local business, new medical technology, etc. As Tom Szaky of TerraCycle alludes to, this is about investment opportunities for the 99%.

You are absolutely right Devin. Crowdfunding will explode not only in the US but in Canada as well. We at Healthy Crowdfunder are here to make a difference in this world. Crowdfunding or not, we will focus on financing health wellness and high tech health ventures. We want to drive a major dent in the rising health care costs. Through financing and co-development of health ventures, we will help people avoid getting sick in the first place or bring more advanced projects to the next level.